DuPont Uses Proceeds From Asset Sale To Retire Debt, Clears Path To Fund Growth Initiatives

DuPont Fabros Technology, Inc. DFT has used the proceeds from the same of its New Jersey data center (NJ1), along with a May 2016 preferred stock offering, to redeem its series A preferred stock.

Barclays’ Ross L. Smotrich maintains an Overweight rating on the company, while raising the price target from $48 to $49.

Asset Sale

“The NJ1 sale occurred three weeks sooner than we expected resulting in $0.01/sh dilution. Various preferred stock redemptions and an issuance resulted in net $0.01/sh accretion to our 2016 estimate,” Smotrich mentioned.

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The analyst noted the transactions offset one another for 2016, although they are expected to be accretive in the out years, driven by the full-year impact of the lower preferred stock dividend rate as well as lower total outstanding.

DuPont Fabros has announced the sale of its NJ1 facility on June 6 for $125 million, representing a gain of $25 million.

Funding Growth

The company had earlier suggested a mid-year sale, with the 2016 FFO per share guidance including $0.06 per share of FFO for the asset in 2H16.

Following the redemption of series A preferred stock, the company also intends to redeem its series B preferred stock in July.

“These transactions, coupled with DFT's March equity offering, allow the company to fund its growth initiative without raising leverage levels,” Smotrich stated.

The FFO per share estimate for 2017 has been raised from $3.03 to $3.08, to reflect the savings from the refinancing of preferred stock.